FocusChina eyes petchems innovation, restructuring in next 5 years

15 October 2010 11:01[Source: ICIS news]

By Fanny Zhang

GUANGZHOU (ICIS)--?xml:namespace>China will likely push for the restructuring of its domestic petrochemical industry, with an emphasis on the importance of pursuing technological innovations, to enhance the sector’s competitiveness in the next five years, industry sources said on Friday.

“The petrochemical industry needs to transit into an innovation-dominated development mode from the present production-dominated one,” said a source from China Petroleum and Chemical Industry Association (CPCIA).

“To achieve that, we would give priorities on projects involving advanced technology and eliminate those low-end productions,” the source said.

CPCIA participates in drafting the five-year plan for the petrochemical industry. The plan was expected to be published sometime next year immediately following announcement of the big 12th Five-Year Plan (2011-2015) – the country’s comprehensive economic, social and industrial development blueprint, industry sources said.

An outline of the massive blueprint will be discussed and approved at the Fifth Plenary Session of the 17th Central Committee of China’s Communist Party, which started on Friday in Beijing and would run through to 18 October.

Energy safety and energy conservation would most probably be tackled, indsutry sources said.

The industry restructuring could entail relocation of production sites and streamlining of product portfolios of big companies, but specific details of the plan were still in the works, industry sources said.

“The government would continue to encourage oil companies to acquire exploration rights in overseas oilfields, while at the same time, speed up coal chemical development and alternative fuel applications,” said Qiu Ziyuan, a senior analyst at Shenzhen-based broker China Merchants Securities (CMS).

An outline of the plan for the petrochemical industry was almost complete and was expected to be submitted for approval by the end of this year, said the source from CPCIA.

“[But] details would only come sometime next year,” the source said.

According to media accounts, China would likely cut its energy consumption per capita GDP by a further 15-20% over the next five years starting 2011. China had set a 20% reduction in energy usage in its 11th Five-Year Plan that will end this year.

The country, in its 11th Five-Year Plan (2006-2010), had hoped that its economy would transit from an export-led to demand-led growth, but analysts said that the results had not been ideal, citing that China’s trade surplus had remained high.

“For the next five years, consumption expansion would continue to be a basic policy,” said Qiu of CMS.